Ericsson NT published their Q1 2021 results yesterday, showing a -9% YoY decrease in sales, a 26% YoY increase in EBITDA and a net profit of HRK 41m (+38% YoY).
In Q1 2021 Ericsson NT posted sales in the amount of HRK 445.9m, representing -8.6% YoY decrease. The decrease in sales came as a result of cyclical investments of their main customers in the networks. Sales in the domestic market amounted to HRK 178m, marking a decrease of 10.9% YoY. Export market sales fell 21.1% YoY to HRK 50.8m. The decrease was due to delayed investments of telcos caused by the COVID-19 pandemic. In addition, the political and economic crisis in some export markets made business more difficult. Finally, Ericsson market recorded sales in the amount of HRK 217.1m which represent a decrease of -2.8% YoY.
Sales Breakdown (HRK m)
Gross profit amounted to HRK 63.1m, up by 26.9% YoY, due to lower transition and transformation costs, and the impact of cost-efficiency program. As a result, gross margin soared 4 p.p. to 14.2%.
EBIT amounted to HRK 45.2m marking a 35.2% YoY increase due to an improved gross profit. Meanwhile, selling and administrative expenses increased by 2.8% YoY due to increased presales activities related to 5G radio access and core networks, and broadband network implementation projects.
Below the operating line, the net financial result more than doubled, amounting to HRK HRK 3.2m (+194%) because of positive FX movement. Finally, net profit amounted to HRK 40.8m representing a 38.2% YoY increase.
Ericsson Key Financials (HRKm)
In Q1 2021, TNG recorded a decrease in revenue of 27.8%, a decrease in EBITDA of 77.3% and a net loss of HRK 9.5m
In first three months of 2021, TNG reported revenue of HRK 50m, which is a decrease of 27.8% compared to Q1 2020 (HRK 69.3m). This YoY drop was mainly due to the record low freight rates on the spot market, in contrast to the Q1 2020 when record high spot market rates were recorded. In addition to spot price drop, drydocking of m/t Pag for 19.31 days and “off hire” days, due to challenging conditions in performing crew change during COVID-19 pandemic, were also significant factors in that drop. Fleet utilization was 95.3%, as they had 514 revenue days out of 540 operating days.
Commissions and voyage associated costs amounted to HRK 16.2m, while for the same period last year it amounted to HRK 7.8m, putting total operating costs at HRK 42m (vs. HRK 32.7m in Q1 2020). This increase in costs was attributed to higher exposure to the spot market compared to Q1 2020. As a result, recorded EBITDA for Q1 2021 was HRK 8.3m and was significantly reduced compared to the same period last year when it amounted to HRK 36.6m (77.3% decrease). This puts EBITDA margin at 16.6%, while for the same period last year it was 52.8%.
The significant reduction in vessel revenues and increase in operating expenses led to the net loss of HRK 9.5m, complete opposite to the gain of HRK 16.9m, made in the same period previous year.